Economic Decline in France: The Failed Leadership of Hollande

Bonjour TristesseThe Economic and Political Decline of France

France is in the grip of a crisis. As both its economy and European influence weaken, scandal has hobbled its political elite. The country needs drastic overhaul, but President Hollande does nothing but waver and hesitate.

Judging by the imperial magnificence of the Elysee Palace, France has never ceased to be a world power. Rooms with five-meter (16-foot) ceilings, gilded chandeliers, candelabras and elaborate stucco work are guarded by members of the Republican Guard, who parade in front of the palace gates with their plumes of feathers and bayonets.

The man in charge, on the other hand, seems lonely and small in his palace. He is surrounded by court ushers who make sure that glasses and writing sets are perfectly arranged, and when he enters a conference room, they call out grandly "Monsieur le Président de la République!", to give his attendants time to stand up for him.

François Hollande never intended to become a king, but rather a "normal president," as he put it, and now he has to play one nonetheless. He occasionally seems like an actor who has somehow ended up in the wrong play.

Outside, throughout the country, unemployment reaches new highs each month, factories are shut down daily, hundreds of thousands take to the streets to protest gay marriage, and the French are increasingly outraged over a barrage of new political scandals as the country hovers on the cusp of waning global relevance. Yet this roar of dissatisfaction doesn't permeate the walls of Hollande's world. Here, it is quiet, very quiet.

Shortly after moving into his new official residence, Hollande warned his staff that in a palace it is easy to feel protected, and he insisted that he did not want to be "locked in." But that is precisely what is happening, as evidenced by the documentary film "Le Pouvoir" (The Power), which recently debuted in French theaters and whose creators accompanied Hollande during the brutal first eight months of his presidency.

Elite in a Bubble

They paint an image of a likeable man who seems to spend a lot of time rewriting speeches prepared by his staff. As you watch him in the movie, you start to wonder: Does he do all the important things when no one's watching or does he really spends most of his time on the unimportant? However, the main subject of the film is not the president, but rather the reality bubble in the country's top echelons. Not just Hollande, but also most of his cabinet ministers, still reside in Parisian city palaces that predate the French Revolution, and perhaps that's a problem.

A justice minister who spends her days in the Hôtel de Bourvallais on Place Vendôme, next door to the Hotel Ritz, a culture minister who goes to work at the magnificent Palais Royal, a prime minister whose offices are in the grand Hôtel Matignon and a president who resides at the Elysee Palace, they all need a great deal of inner strength to avoid losing their connection to reality. It's a difficult proposition, because Paris's settings of power convey the message that France is big, rich and beautiful.

But the mood hanging over the country is depressed. France is in the midst of the biggest crisis of the Fifth Republic. It feels as if the French model had reached an end stage, not just in terms of the economy, but also in politics and society. A country that long dismissed its problems is going through a painful process of adjustment to reality and, as was the case last week, can now expect to be issued warnings by the European Commission and prompted to implement reforms.

France's plight was initially apparent in the economy, which has been stagnating for five years, because French state capitalism no longer works. But the crisis reaches deeper than that. At issue is a political class that more than three quarters of the population considers corrupt, and a president who, this early in his term, is already more unpopular than any of his predecessors. At issue is a society that is more irreconcilably divided into left and right than in almost any other part of Europe. And, finally, at issue is the identity crisis of a historically dominant nation that struggles with the fact that its neighbor, Germany, now sets the tone on the continent.

The French economy has been in gradual decline for years, without any president or administration having done anything decisive about it. But now, ignoring the problems is no longer an option. The economy hasn't grown in five years and will even contract slightly this year. A record 3.26 million Frenchmen are unemployed, youth unemployment is at 26.5 percent, consumer purchasing power has declined, and consumption, which drives the French economy, is beginning to slow down, as well.

There is a more positive side of the story, which sometimes pales in the face of all the bad news. France is the world's fifth-largest economy, and interest rates for government bonds have been at historic lows for months. The country is far from being on the verge of bankruptcy and cannot be compared with Italy or Spain, and certainly not with Greece. Nevertheless, France is ailing. And looking weak is something the French themselves hate more than anything else.

Consequences of French Decline

This mixture of factors could jeopardize the entire European structure. For one thing, if France continues to decline, more and more responsibility will be shifted to Germany. "Germany cannot carry the euro on its shoulders alone indefinitely," writes Harvard University economist Kenneth Rogoff. "France needs to become a second anchor of growth and stability."

Another problem is that the European Union is losing its standing in France at a more dramatic pace than in any other EU member state. According to a study by the Pew Research Center, the public approval of the EU in France has declined from 60 to 41 percent in only a year. This might be owed to the uncomfortable fact that Brussels is increasingly treating France as a problem and not as one of Europe's supporting columns, and many French citizens have started to see the terms 'Brussels' and (German Chancellor) 'Angela Merkel' as synonymous.

But is the EU to blame for the France's crisis? Can Europe truly be held responsible for the fact that the government is behind 57 percent of total economic output in France? That government debt has risen to more than 90 percent of the gross domestic product? Is it Germany's fault that, for decades, French administrations have failed to make the country's business environment more competitive? And has anyone in Brussels demanded that a fifth of all workers in France be employed by the government?

France may be ailing, but it still has a lot going for it. It is home to successful major corporations, such as the luxury brand group LVMH, tire manufacturer Michelin and many pharmaceutical companies. The country has an efficient healthcare system, the highest birthrate in Europe and healthier demographics than Germany, fostered by tax breaks for families, the acceptance of working mothers as a fact of life and a corresponding system of full-day childcare.

But the French welfare state costs money, a lot of money. The country has neglected to make decisions on how much its individual achievements are worth, and how certain luxurious aspects of life it has come to appreciate could be modified to conform to not-so-luxurious realities, including the 35-hour workweek, a retirement age of 60 for some workers and unemployment benefits of up to 6,200 ($8,122) a month. As a result, there is a sense of gridlock, and a sour public mood is following on the heels of bad economic news.

Stuck in Past Grandeur?

France has an illustrious past, of which it is justifiably proud, but its historic success also prevents it from clearly recognizing the need for reforms. The omnipotent, bloated central government, which also controls the economy, should have been reformed long ago. The privileges of the Paris political elite are so outdated that they have become intolerable, and many bribery and corruption scandals are undermining an already fragile political legitimacy.

It cannot be accidental that France's leading politicians increasingly refer to their country as the "grande nation." Since the election campaign, President Hollande has hardly missed an opportunity to invoke the nation's greatness. With some dialectical malice, one could see this as evidence that France's greatness is now becoming a relic, but it certainly reflects the self-hypnosis of a nation whose stature is in the process of shrinking.

"Our soldiers demonstrated our role," Hollande said recently in a major press conference at the Elysée Palace, as he praised one of his rare successes, the military operation in Mali. "Namely that of a great nation that can influence the balance of power in the world."

There is an increasingly stark contrast between the feigned grandiosity of the president's appearances and the faintheartedness of his daily actions. The obstructionism and inflexibility that prevail throughout the entire country can only be eliminated through deep-seated renewal. But so far Hollande, who promised "change" in his campaign, has been more conspicuous for his hesitation than his courage.

Since this spring, Hollande has been viewed by most commentators as the nice "Grandpa" in the Elysee Palace, who lacks the gumption to address the country's serious structural problems. The French constitution grants the office of the president more power than is allotted any other leader of the Western world. Besides, his Socialist Party holds significant majorities in the National Assembly, the Senate and even in regional governments.

In other words, Hollande could get down to business on any day he chooses. He could reform the country as he wished, if only that were his objective. But no one -- not citizens, not journalists and possibly not even his cabinet ministers -- knows what he wants and if indeed he wants anything at all.

Does he aim to be France's great reformer but lacks the courage to defy the left wing of his party, as a member of the German government believes? Or is it that he clings to his party's old formulas, wants to change as little as possible and is waiting for the day when the recovery happens on its own?

Very sad article. Sad, not only for France but also for most of the rest of the world which is following closely behind in Frances footsteps. We in the U.S. don't have the liberal benefits that are available in France, but our [...]

Very sad article. Sad, not only for France but also for most of the rest of the world which is following closely behind in Frances footsteps. We in the U.S. don't have the liberal benefits that are available in France, but our ruling elites are just as out of touch. They live in an entirely different world with an entirely separate rule of law as the rest of us. Our country is no longer a capitalist nation; corporations and governments have colluded to control the economy here as in France to the detriment of many and for the sole benefit of a very few. The world economy is in dire straits due primarily to the neoliberal policies that have plagued the world since the 60s. World power and wealth has been consolidated in the hands of a very few, who have their hands in the governments, corporations and financial entities worldwide. Im afraid we will never again know freedom.

aaallison 06/05/2013

2. The decline of France

We've seen this movie in the decline of Britain as a world power and will, no doubt, see it again. Nothing lasts forever.

We've seen this movie in the decline of Britain as a world power and will, no doubt, see it again. Nothing lasts forever.

vernony 06/05/2013

3. Vive

Its sad for France. They are a great nation, but if they simply do not get a grip on the realities of the shift of power and wealth to the East then they are really set to ever decline. They cannot tackle their problems based upon [...]

Its sad for France. They are a great nation, but if they simply do not get a grip on the realities of the shift of power and wealth to the East then they are really set to ever decline. They cannot tackle their problems based upon a glorious 17th and 18th century. They have to do business now with people who know little about European history, and the judge a country as/is. There is always a historic rivalry between Britain and France, but there is no malice. We would like our nearest neighbour to succeed

bartfromboston 06/05/2013

4. The current situation in France

I browse a variety of French papers online every morning and the uniformity of the content is surprising. Only a few columnists will directly criticize the government, and even they do so in an eloquent and clever fashion that [...]

I browse a variety of French papers online every morning and the uniformity of the content is surprising. Only a few columnists will directly criticize the government, and even they do so in an eloquent and clever fashion that seems entirely lacking in urgency. The impression given is of a society "locked up" in a sense of foreboding that no one seems able to do anything about. One comes away thinking there is a certain infantilism operating at the center of the popular culture, at least as it can be observed from the newspapers, a kind of helpless but self-indulgent narcissistic paralysis. This makes it extremely interesting for a foreigner to read about though, as one waits for what seems like the inevitable moment of detonation...

corsican 06/06/2013

5. France; yesterday, today and the future?

An excellent article, very in depth coverage. Regarding this..."Our soldiers demonstrated our role," Hollande said recently in a major press conference at the Elysée Palace, as he praised one of his rare successes, the [...]

An excellent article, very in depth coverage. Regarding this..."Our soldiers demonstrated our role," Hollande said recently in a major press conference at the Elysée Palace, as he praised one of his rare successes, the military operation in Mali. "Namely that of a great nation that can influence the balance of power in the world."
French soldiers did an good job in Mali but "influence the balance of power in the world?"
France lacked military transport capability and so it called on American transports for assistance. Would be nice if he acknowledged that.
Since he did not, I would say that is in keeping with problems France is not facing...inability to accept reality.
Pity...It is a beautiful country with a great history...much of its greatness given to it by Napoleon as evidenced by what he created in France still in use today.